Synopsys (SNPS) Q3 FY2026 Earnings Call: Q&A Summary

Q: Jason Celino from KeyBanc Capital Markets asked what is driving the incremental acceleration in EDA growth to double digits in Q4 and for the full year.

A: Sassine Ghazi (President and CEO) and Shelagh Glaser (CFO) answered that the acceleration is driven by chip design complexity, advanced packaging, 3D-IC architectures, AI tailwinds, and record hardware revenue, all achieved against a tough 16% compare from the prior year.

Q: Jason Celino from KeyBanc Capital Markets asked about the reengineering of the design process when customers use their own AI models and whether it supplements, incrementally adds to, or replaces existing tools.

A: Sassine Ghazi (President and CEO) answered that customers still need ground-truth physics from Synopsys software for AI models to operate with confidence, making this an opportunity for both EDA and IP.

Q: Joe Vruwink from Baird asked how multi-die efforts are tracking relative to the 30% EDA software demand forecast shared at the 2024 Investor Day and how DRAM processes moving to logic affect EDA content.

A: Sassine Ghazi (President and CEO) answered that the forecast has accelerated, with die-to-and-die wins doubling over the last 12 months, and noted that 3D-IC architectures require integration with ANSYS multiphysics.

Q: Joe Vruwink from Baird asked if the double-digit organic growth in EDA is driven by software performance alongside hardware.

A: Sassine Ghazi (President and CEO) answered that they are very happy with the software component and particularly excited about the delivery of the joint solution with ANSYS.

Q: Charles Shi from Needham & Company asked whether AI native chip design that bypasses commercial EDA tools poses a real threat to the industry.

A: Sassine Ghazi (President and CEO) answered that he is not worried because autonomous workflows require sign-off accuracy, determinism, and constant training on underlying physics, making AI a significant demand driver for Synopsys software rather than a threat.

Q: Charles Shi from Needham & Company asked about the revenue uplift and business model changes regarding Agentic AI agents.

A: Sassine Ghazi (President and CEO) answered that customer engagements are leading to demand for more licenses, and they are discussing hybrid models involving subscriptions and consumption measures, with further details to be shared at the September Investor Day.

Q: Lee Simpson from Morgan Stanley asked for an outline of the speed of the shift to the Factory II custom silicon opportunity and the size and timeline of security IP deployments following the intrinsic ID acquisition.

A: Sassine Ghazi (President and CEO) answered that hyperscalers investing in custom silicon rely on Synopsys interface IP, and they are in advanced discussions to shift business models to license plus royalty, while security remains a growing focus for hardware-level chip protection.

Q: Arsene from Wolfe Research asked how customers are structurally approaching the convergence of thermal analysis and design flow through multiphysics fusion, and whether it requires navigating distinct teams and budgets.

A: Sassine Ghazi (President and CEO) answered that leading customers require codesign to reduce margins, allowing implementation engineers to bring sign-off accuracy early into the design flow, and captured revenue upside from the joint solution.

Q: Arsene from Wolfe Research asked for clarification on whether the $20 million ANSYS revenue raise includes the accounting dynamic discussed last quarter and if the $60 million full-year impact remains the same.

A: Shelagh Glaser (CFO) answered that the accounting change remains in the same range for the full year and the guidance incorporates strength in the ANSYS business, including the channel.

Q: Joe Quatrochi from Wells Fargo asked if the acceleration is driven by AI offsetting non-AI, or if the non-AI business is also accelerating.

A: Sassine Ghazi (President and CEO) answered that non-AI design starts have stabilized after a previous slowdown, while AI design starts continue to see acceleration.

Q: Joe Quatrochi from Wells Fargo asked about the puts and takes on RPO and whether the divestiture had an impact.

A: Shelagh Glaser (CFO) answered that the modest change in RPO came in as expected and was primarily due to the divestiture of the processor IP business that closed during the quarter.

Q: Sitikantha Panigrahi from Mizuho asked about the adoption pipeline trajectory for multiphysics Fusion and whether the 2027 contribution will show up as incremental EDA growth or share gains.

A: Sassine Ghazi (President and CEO) answered that early engagements have validated up to 10x faster design closure, and as customers move to production in FY 2027, it will contribute to EDA growth alongside progress toward the $400 million synergy target.

Q: Sitikantha Panigrahi from Mizuho asked how Mike Elo is driving changes in the sales organization for integrated product rollouts.

A: Sassine Ghazi (President and CEO) answered that Mike Elo is preparing the organization for IP Factory II, AI monetization, and joint solutions by engaging customers in areas of differentiation.

Q: Jay Vleeschhouwer from Griffin Securities asked how the migration to multiphysics compares to the previous ICC to Fusion compiler transition.

A: Sassine Ghazi (President and CEO) answered that while Fusion brought sign-off capability into physical implementation, multiphysics brings actual simulation engines into the design phase via a unified data model.

Q: Jay Vleeschhouwer from Griffin Securities asked what ingredients are necessary for customers to execute the reengineering of engineering.

A: Sassine Ghazi (President and CEO) answered that complete EDA assets from spec to sign-off are required, alongside autonomous workflows and cognitive layers like those demonstrated with Microsoft and NVIDIA.

Q: Gary Mobley from StoneX asked if the large GPU-based digital twin deal for ANSYS was driven by accelerated compute and whether the efficiency accrues to NVIDIA or Synopsys.

A: Sassine Ghazi (President and CEO) answered that simulation is ideal for GPU acceleration with 40x to 60x speed-ups, and Synopsys captures the software value while NVIDIA benefits from the hardware run layer.

Q: Gary Mobley from StoneX asked if revenue growth in Korea is a reflection of the memory market strength and market share retention at Samsung.

A: Sassine Ghazi (President and CEO) answered that they have great collaboration with Samsung, SK Hynix, and the broader Korean region across IP, EDA, and ANSYS.

Q: Kelsey Chia from Citi asked whether the IP business could exceed its long-term mid-teens growth rate given robust hyperscaler chip design activity and stabilizing non-AI markets.

A: Sassine Ghazi (President and CEO) answered that mid-teens remains their long-term guide while factory I and custom chip opportunities expand, and more updates will be provided at the September Investor Day.